Skift Take

Uber’s rapid growth worldwide highlights how technology is changing the taxi and car service industry, which now needs to recognize the change and start adjusting its own business model rather than fight against new ones.

— Samantha Shankman

London’s black-cab drivers are to launch private prosecutions against minicab drivers using Uber – the car booking app that has spread rapidly since its launch in San Francisco four years ago, to threaten traditional taxi services in more than 100 cities across the world.

It came just a day after the Silicon Valley firm’s chief executive, Travis Kalanick, confirmed his company was set for a “record breaking” private fundraising that could see it valued at close to $17bn (£10bn), more than the home-rental app Airbnb.

The London Taxi Drivers Association (LTDA) is issuing court summonses to six Uber drivers on Thursday, on the grounds that it is illegal for private-hire vehicles to be fitted with meters. The test cases on whether the app comes within the definition of a meter could affect hundreds of Uber drivers already operating in the capital.

The union is so concerned about Uber, which this month launched in Manchester, that it plans to bring central London to a standstill on 11 June, when black-cab drivers will park their cars in Parliament Square, Trafalgar Square and along Whitehall from 2pm.

Transport for London, which regulates private-hire vehicles, believes installing Uber’s equipment in cars does not constitute a breach of the law, but it is now seeking confirmation from the high court. On Thursday, TfL said it would seek a “binding” decision on the highly contentious issue from judges.

LTDA’s general secretary, Steve McNamara, said a decision from the high court would be unlikely before the end of the year and described the move as a stalling tactic designed to prevent his union from being able to call a judicial review. “It is crystal clear Uber are breaching the Private Hire Act,” said McNamara.

The Act defines a meter as “a device for calculating the fare to be charged in respect of any journey by reference to the distance travelled or time elapsed since the start of the journey”.

Licensed drivers in cities across Europe and America are protesting at the new wave of taxi hailing services, which licensed drivers argue endanger passengers and threaten cabbies’ ability to make a living. Last week, the offices of British startup Hailo, which was set up by three London cab drivers, were vandalised after the company extended its smartphone booking service from black cabs to private hire vehicles.

In Paris, major roads have been gridlocked by protests and an Uber car was attacked, and the government is looking at ways to outlaw the new wave of cab booking services. There have been demonstrations and legal action in Brussels, Toronto, Berlin and New York.

The Uber smartphone app shows the user a map, with the location of nearby cars looking for passengers. The customer can order the car and pay the fare from their phone, and Uber uses a GPS tracking system to measure the time and distance travelled by cabs.

For London’s 65,000 private-hire vehicles, the app saves money by reducing the number of journeys they make in search of passengers – for example by ensuring drivers can drive to and from an airport with a fare either way. In return, Uber takes a cut of the fare, typically 20%. The LTDA says measuring time and distance travelled constitutes metering and that only black cabs are licensed to use meters. Customers of private-hire vehicles have to agree the price before the journey based on standard charges.

In a statement, TfL said: “On the issue of taxi meters, the law is unclear and we have taken a provisional view. We will be asking the high court to provide a binding ruling. This is the sensible approach, and we hope that London’s taxi drivers and private-hire drivers and operators will work with us to bring clarity on this issue.”

After his London office wall was graffitied with the word “scabs”, Hailo founder Ron Zeghibe published an open letter on the company’s website urging drivers to accept the upheavals in their industry. Zeghibe said: “The worst thing the taxi industry could do now is deny that things are changing and hold on to the past. Complaining is not a strategy.”